Livelihoods and Policy in the Artisanal and Small-Scale Mining Sector - An Overview

52 Pages·2005·0.39 MB·English

by  Ele Fisher

Livelihoods and Policy in the Artisanal
and Small-Scale Mining Sector
- An Overview

Centre for Development Studies
University of Wales Swansea

November 2004

Centre for Development Studies
University of Wales Swansea
Singleton Park
Swansea SA2 8PP
[email protected]
Table of Contents

1. Introduction.............................................................................................................3
2. ASM Livelihoods.....................................................................................................4
2.2 ASM Definitions and Distinctions................................................................5
3. The Significance of the ASM Sector in the Wider Economy and Environment.......7
3.1 Employment....................................................................................................7
3.2 Output.............................................................................................................8
3.3 Foreign Exchange...........................................................................................9
3.4 Environmental...............................................................................................10
3.5 Multiplier Effects............................................................................................11
4. Underlying factors and trends affecting livelihoods in the ASM context...............13
4.1 Political Environment....................................................................................13
4.2 Economic Reform...............................................................................................14
4.3 Environmental Change and Land (Population).................................................15
5 Institutional and Regulatory Frameworks..............................................................16
6. Social organisation, networks and relationships...................................................20
6.1 During the Production Cycle...............................................................................20
6.2 Between Miners............................................................................................21
6.3 Relations between the Indigenous and Migrant populations........................22
6.4 Relations between Men and Women............................................................22
6.5 Child labour...................................................................................................23
7 Assets, capabilities and livelihoods of ASM miners...................................................24
7.1 Financial capital............................................................................................25
7.2 Human capital...............................................................................................25
7.4 Natural capital...............................................................................................29
7.5 The Vulnerability Context..............................................................................30
8 The Differential Capacities to Claim Rights and Entitlements in the ASM Sector.30
9 Key Challenges.....................................................................................................32
10 Meeting the Challenges........................................................................................36

References...................................................................................................................44
1. Introduction

This report seeks to bring together important findings from research on artisanal
and small-scale mining (ASM) orientated around social and community issues.
It identifies a number of key policy challenges, and suggests how these policy
challenges might be met.

The report draws on a range of material looking at the sector from across the
world. In particular, it uses two DFID funded livelihoods studies recently carried
out in Tanzania and Ghana and five UNDP funded livelihoods studies in
Tanzania, Ghana, Guinea, Mali and Ethiopia. Whilst most of the literature
referred to has not been compiled using a livelihoods methodology, findings
have been grouped and presented in a way that is consistent with a livelihoods
approach.

Popularised by DFID, the UNDP and NGO’s such as CARE and Oxfam the
Sustainable Livelihoods Approach (SLA), is used as a tool for assessing the
socio-cultural and economics characteristics of ASM communities (see
Brocklesby & Fisher, 2003). It aims to establish a connection between local
realities and the level “at which policies intended to change these realities are
formulated” (Shankland, 1998, p. 4). As Carney (1998, p. 4) explains at length
in the following passage:

“A livelihood comprises the capabilities,
Keyelements of a sustainable
assets (including both material and
livelihoods approach
social resources) and activities required
for a means of living”. It is considered • People focused
sustainable “when it can cope with and • Macro/micro linkages
• Causes not symptoms
recover from stresses and shocks and
• Policy practice gaps
maintain or enhance its capabilities and
• Creating mechanisms of
assets both now and in the future, while
accountability
not undermining the natural resource • Multi-sectoral
base”. • Strengthening ownership and
capacity
SLA is held to be a valuable conceptual • Wide participation
• Builds on peoples’ existing strengths
and programming framework for
achieving poverty reduction in a
sustainable manner within ASM communities (Labonne and Gilman, 1999. p. 4).
Since the launch of five UNDP studies, the SLA has gained considerable
momentum as a research approach in the ASM sector (ibid. 1999).

Whilst the first section of this report briefly touches on existing research and
development activity within the sector,1 the focus of this document is the
identification of key challenges to more constructive policy in the sector and the
presentation of suggested policy interventions to meet these challenges.

1 Drawing largely from a literature review carried out under this project entitled “A Global
Analysis of Livelihood Issues in Artisanal and Small Scale Mining”, Centre for Development
Studies/Bastia (2004).
A key observation about the ASM sector is its huge diversity (e.g. between and
within countries, type of mineral, modes of extraction and processing, marketing
arrangements, political economy, socio-economic organisation, etc.). The
challenges and possible policy approaches suggested in this document are,
therefore, necessarily broad. Indeed we would strongly argue that strategies to
reduce vulnerability and improve livelihood security for artisanal and small-scale
miners need to be context-specific at both the country and local levels. By
implication, in a report such as this, emphasis needs to be given to process
issues related to ‘how to do it’ rather than specifying a blueprint ‘what to do’.

Any policy intervention requires a detailed analysis of the political economy and
institutional environment of ASM the micro realities facing those engaged in the
sector, and the development of a locally owned process, before appropriate and
sustainable policy interventions can be identified. Beyond the ASM sector this
is recognised as essential for successful poverty reduction in the context of
country-level Poverty Reduction Strategy Papers, in the recent DFID Drivers of
Change Initiative and in thinking behind recent World Bank/DFID Poverty and
Social Impact Assessment initiatives.

2. ASM Livelihoods

Geographically, Asia, which has the highest number of people involved in ASM,
is least covered by the ASM literature, while Latin America has received a lot of
attention despite the fact that fewer people are engaged in this sector.
In terms of approaches, a number of recent studies have taken a more holistic
approach, including the sustainable livelihoods approach (Gilman, 1999;
Labonne and Gilman, 1999; Labonne et al., 2001a and b; MIME Consult, 2002),
while others have concentrated on a specific aspect of the ASM industry, for
example, the environmental consequences of ASM activities (Hinton et al.,
2003a; Malm, 1998; Veiga, 1997; Veiga and Hinton, 2002), regulatory
frameworks (Barry, 1996; Bugnosen, n.d.) or technical issues (Bugnosen, 1995;
ITDG, 1990 and 1996).
In-depth studies of ASM communities are rare. A limited number of micro-level
socio-economic studies have been carried out (Hughes and Furamera, 1999;
MIME Consult, 2002), as have studies on the livelihood strategies of specific
communities whose members engage in ASM (Heemskerk, 2000 and 2002;
Walsh, 2003). Whilst certain studies (e.g. Heemskerk, 2000 and 2002; Hilson,
2002c; MIME Consult, 2002), seek to profile the needs of people living within
ASM communities, the main emphasis of the literature hitherto has been the
macro characteristics of the sector and there are few good social analysis that
consider artisanal mining from the perspectives of those who identify
themselves as miners and live within mining communities.
There are also few studies that capture the linkages between the micro and
macro level in terms of the institutions, legal practices and policy processes that
serve to exclude or include AS miners in decision-making that affects their lives.
To a certain extent this obscures an assessment of the significance of ASM in
people’s livelihoods and how participation in the sector affects livelihood
security and wealth creation. By implication, our understanding of the
contribution ASM makes to poverty reduction in different contexts for different
groups of people is not well understood.

2.2 ASM Definitions and Distinctions

For decades, experts worked to devise universal definitions of “artisanal” and
“small-scale” mining but were unable to reach a consensus. As Hollaway
(1997, p. 35) explains in the following passage:
“In the 1980s, a string of conferences largely sponsored by the United
Nations spent a disproportionate amount of time trying to define what it
was they were talking about. At what point does ‘artisanal mining’ become
‘small-scale mining’? When does a small-scale mine become a ‘medium
scale mine’? The problem persisted across languages: In French the
difficulty was defining between ‘les operations artisanale, semi-industrielle
et industrielle’
For their own purposes, countries have devised unique definitions of “artisanal”
and/or “small-scale mining”, according to a variety of criteria such as the
following:
• Level of mechanisation (e.g. as in Brazil, Burkina Faso Ghana and Sri
Lanka)
• Size of Concession (e.g. as in Ghana, Zambia and Zimbabwe)
• Depth of working (e.g. as in Colombia, Senegal and Ethiopia)
• Capital investment (e.g. as in Argentina, Mexico, South Africa, Pakistan
and Thailand)
• Level of employment (e.g. as in Chile,
• Production levels (e.g. as in the Philippines and Senegal)
Certain countries have made a distinction between small-scale and artisanal
mining in legislation; in such cases, the former is associated with illegal
activities and minimal mechanisation, and the latter, with semi-mechanisation
and organisation (D’Souza, 2002; Quiroga, 2002). In Ethiopia, for example,
small-scale mining operations have capped production levels and are
designated by the Minister, whereas artisanal mining is defined as non-
mechanised mineral extraction activities carried out by either individuals or
groups. A similar distinction exists in Brazil, where a separate definition has
been devised for informal, rudimentary garimpeiro (artisanal) activities.
Artisanal and small-scale miners are engaged in the extraction and processing
of a range of commodities, including gold and diamonds, gemstones, industrial
minerals or construction materials (Hilson and Maponga, 2003). However, with
few exceptions (e.g. China and coal, and India and construction materials),
most artisanal and small-scale miners extract high-value minerals, such as
gemstones (90-100 per cent of total production in most countries), diamonds
(80-100 per cent in countries that are not major producers, e.g. Ghana), gold
(up to 100 per cent in many countries, e.g. Burkina Faso, Cuba, Guyana,
Mozambique, Myanmar, Niger – and over 50 per cent in Bolivia, Mexico,
Philippines, United Republic Tanzania), and other high-demand commodities
such as reserves of tantalite in the Democratic Republic of Congo (ILO, 1999).

Since the United Nations published its seminal report, Small-Scale Mining in
Developing Countries in 1972, the research emphasis in the sector has
changed dramatically. Building upon the prolonged – and largely unsuccessful
– attempts made in the 1970s to define and compartmentalise artisanal and
small-scale mining, research and policy focus shifted to the technical aspects of
the industry. It had become evident that despite exhibiting varying
characteristics from location-to-location, ASM was generally a semi-
mechanised, poverty-driven industry that did not require increased attention to
be paid to devising a universal definition for policy-making purposes. The
research focus has since shifted further to encompass the livelihood aspects of
the sector (Table 1).

Table 1: Focus of ASM Debate and Intervention

Period ASM Focus
1970s Definitional issues
1980s Technical issues
Early 1990s Towards integration of technical, environmental, legal,
social and economic issues
1990s Special attention on legalisation of ASM sectors
Mid to late Relation between large mining companies and ASM;
1990s Gender and child labour issues
2000s cCmmunity related issues and sustainable livelihoods

The use of the livelihoods approach, or at least the principles underpinning it, is
now recognised as an important planning tool for poverty reduction in the ASM
sector. The following sections use key livelihood themes to summarise key
research findings from the sector.
3. The Significance of the ASM Sector in the Wider Economy
and Environment

The developmental potential of small-scale mining was recognised for the first
time in the UNDESA publication, Small-Scale Mining in Developing Countries,
1972 (UNDESA, 1972); this marked the first time that global attention was
placed on ASM (Bayle, n.d.). The heightened research interest on ASM has
given rise to a burgeoning literature covering a wide-range of industry-specific
issues. Many have lobbied for ASM to be used as a tool for rural and
community development (e.g. Bayah et al., 2003; Wall, 2000) and as a
springboard for people-centred development (Ghose, n.d.). Weber-Fahr et al.
(n.d.:440) estimate that “there are approximately 60 developing and transition
countries where mining is or could become an important economic activity”,
which makes the promotion of ASM an appropriate strategy for governments
aiming to raise living standards in rural communities.

3.1 Employment
In terms of the numbers of people employed in ASM: Asia is the most significant
region, followed by Africa and Latin America. China alone is estimated to
employ 2.5 million people in what are considered the world’s most dangerous
mines – mainly village-level coal mines that the state is constantly trying to
close. As noted by the ILO, as many as 6,000 people die each year in these
mines (ILO, 2003).
In terms of employment, the ILO has estimated that between 11.5 and 13
million people engage in small-scale mining worldwide (see Table 2); it is
important to note that, with employment prospects dwindling in most parts of the
developing world, the ILO’s estimates are likely to be vast under-estimates.

Table 2: Regional spread of employment in ASM

Region Estimated employment in small-scale mining
Africa 3.0-3.7 million
Asia/Pacific 6.7-7.2 million
Latin America 1.4-1.6 million
Developed countries 0.4-.05 million
Worldwide – TOTAL 11.5-13 million
Adapted from ILO, 1999:7

In Ghana, it is estimated that 30,000 people are employed within the legalised
small-scale mining sector (World Bank, 1995), with the Minerals Commission
and the Ghana Chamber of mines noting that 60 per cent of the country’s total
mining labour force is employed in small-scale mines (Hilson, 2001). However,
an additional 200,000 individuals are believed to be working illegally as
galamsey2 (after Appiah 1998; Aryee 2003). In countries such as Brazil,
Ethiopia, Tanzania and Zimbabwe, the number of illegal miners operating is
also in the hundreds of thousands although employment statistics are
notoriously difficult to capture.
It is clear that these figures are, in most cases, estimates (and likely to be
under- representative) due in large part to the fluid nature of involvement in
ASM activities and the fact that a large percentage of activities are carried out
illegally and in a covert manner, for which there are few if any statistics
available. Moreover, entire sectors within the ASM are often not taken into
account, particularly in the case of industrial minerals (e.g. lime in Zambia, salt
in Ghana, barytes in India or gypsum in Nigeria) and/or construction materials
(e.g. aggregates or brick clay), which are often produced for local consumption
and not exported (D’Souza, 2002; Drechsler, 2001; ILO, 1999).
In terms of fluidity, employment numbers in ASM vary widely depending on, for
example, the season, alternative livelihood opportunities and the price of
minerals (Ethiopia, AB&A, 2002). Total number employed, however, does not
fully describe the potential value of ASM employment. Generally, artisanal
mining “has proved to be a primary source of employment for job seekers from
various parts of the country who are relatively disadvantaged in the labour
market (e.g. unskilled, low skilled, women, disabled, etc.)” (Ethiopia, AB&A,
2002; 88).

From figures of employment it is possible to extrapolate estimates of the
number of people who are dependent on the sector. Based upon ILO findings
compiled in 1999 (ILO, 1999), Jennings (2004) has argued that as many as 100
million people; including dependent family members and participants in
downstream industries (e.g. gemstone polishing, transportation, catering, etc.)
depend upon the sector for their livelihood. Again, with estimates of direct ASM
employment being unrepresentative, it is likely that the number of dependents
exceeds this estimate.

3.2 Output
The MMSD (Mining, Minerals and Sustainable Development) Global Report on
ASM points out that “despite the low levels of production achieved at an
individual level, the often large numbers involved means that on a national scale
total production can be significant, in some cases equalling or exceeding that
produced by large mines” (Hentschel et al., 2002:12).
Globally, it is estimated that the sector produces 15-20 per cent of the world’s
non-fuel mineral production (ILO, 1999:3). The sector produces 20 per cent of
the world’s coal, 31 per cent of its industrial materials and 12 per cent of other
metals (Noetstaller, 1987). Although the composition of the sector has changed
dramatically since these estimates were put forward (due to, for example, the
emergence of tantalite mining in the DRC, intensification of gold mining in parts

2 Local name for illegal small-scale miners.
of Africa, and retrenchment of large-scale mine workers) authoritative revised
estimates have yet to be made.
Certain countries have maintained detailed data on output on small-scale
mining, which can be used to illustrate the sector’s contribution to national
mineral output; this has been possible in large part because of the
implementation of sophisticated mineral purchasing schemes. One notable
example is Ghana, where the Minerals Commission has detailed data on
diamond and gold purchases from small-scale miners: in 2003, the sector
accounted for 9.5% of gold and 82% of diamond production (Amankwah and
Anim-Sackey, 2003). Similarly, in the Philippines, according to statistics
compiled by the government and banks, the small-scale mining sector is known
to have contributed to 40-50% of national gold production in the period 1990-
1990 (Bugnosen, 2001). A similar situation exists in India, where some 3000
small-scale mining operations generate 50% of the country’s non-fuel mineral
output (Jennings, 1997), and in China, over 93,000 coal mines distributed over
1,258 counties with a workforce of at least five million, account for well over
50% of total national coal output (Ghose, 1994).

In other countries, an overwhelming majority of economic minerals are
produced by the AS sector. For example, in Guinea, the share of artisanal and
small-scale mining in national gold production rose from 66% in 1990 to almost
100% in 1993, and in the Central African Republic, where diamonds and gold
account for nearly 100% of national mineral exports, 90% of diamond and 100%
of gold production is carried out by artisanal and small-scale miners (Bocoum
and Samba 1995; UN 1996a; UN 1996b). In Brazil, which is by far the largest
producer of gold in Latin America, at any given time, as many as one million
people are involved in artisanal and small-scale gold mining, producing between
75 and 90% of national gold output (Buntenbach et al., 1995).

To summarise, in terms of production, ASM plays a significant role in most, if
not all, developing countries with proven mineral deposits.

3.3 Foreign Exchange
ASM also makes a valuable contribution to foreign exchange earnings in
countries where the minerals are exported (ILO, 1999). As Hentchel et al.
(2002) explain, at the macro-economic level, production of high-value metals
and gemstones, for instance, are more or less standard “currency”, the
produced value equivalent to additional foreign income.
In Ghana, for example, over US$300 million in gold has been collected from
small-scale miners since legalisation of the industry in 1989. In Indonesia, a
thriving small-scale gold mining sector comprised of some 77,000 operations
generates a combined US$58 million in earnings annually (Hollaway, 1997).
Box 2 profiles the case of Suriname.
Box 2: Suriname and Foreign Exchange
“The most direct economic influence of small-scale gold mining has been on the foreign
exchange reserves. In 1994 the Central Bank of Suriname in an effort to increase the
country’s foreign exchange reserves decided to buy gold. About 800 kg of gold was bought
that year and 3000 in 1995, estimated to be about 25% of total production. With the gold
purchase operation the Bank was able to stabilise the economy and the Surinamese
guilder appreciated more than 50% against the US dollar in one year “ (OAS , n.d.:11).

Small-scale mining activity is of significant importance, given the exploitive
nature of large-scale mines. As indicated by scholars such as Ross (2001),
Pegg (2002) and Campbell (2003), large-scale mining activity, which is
predominantly foreign-owned, repatriates the majority of revenues generated.
The revenues generated by small-scale mining activities, however, are
generally retained within the host country. A case in point is Ecuador, where an
estimated 80% of income from small gold mining activities is invested in the
country (includes royalties, income tax and added value tax), with the balance
used to purchase machinery, spare parts and consumables from international
markets (Sandoval, 2001).

3.4 Environmental

The combination of gaseous mercury released from gold amalgamation and
toxic aqueous mercury discharged to streams and soils is the most serious
environmental threat posed by artisanal and small-scale gold mining. During
amalgamation, mercury is used to pan gold and is added to gold-aggregated
sediments, which then “wet” and adhere to metallic gold, forming pasty
amalgams. These are subsequently panned, filtered and burned to produce the
final gold product. In the process, significant quantities of both gaseous and
metallic (aqueous) mercury are dispensed into surrounding environments. The
sector is also strongly associated with widespread land degradation. Typically,
pits are not reclaimed, and previously-vegetated areas are not re-graded
consequently inducing erosion and subsequent siltation.

While it is widely accepted that ASM causes environmental damage at a local
level, some have argued that on a national level, the environmental
consequences of ASM are not as widespread as most of the literature suggests.
For example, Scott (2002), who evaluated two small-scale mining sectors in
Zimbabwe (small-scale brick making and gold mining), noted that these
practices contributed to deforestation, river and dam siltation as well as mercury
pollution and land degradation but “in national terms these impacts do not
present a major environmental problem for Zimbabwe.” (Scott, 2002:2).
Similarly, staff at the Guyana Geology and Mines Commission (GGMC), who
reported that there is no problem with illegal garimpeiro (artisanal) mining
activities in Guyana as in Suriname and French Guiana (Veiga, 1998), have
concluded, based upon extensive research carried out by CIDA, that mercury
pollution from small-scale gold mining is not an environmental concern.